Demand For Popular Short-Term Insurance Plans Could Surge If Health Law Is Relaxed

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WWR Article Summary (tl;dr)As their name suggests, short-term insurance plans provide coverage for a limited period of time, often six months or less. They generally don’t cover such things as preexisting conditions, maternity services or prescription drugs.

Kaiser Health News

Short-term health plans have been around for decades, bridging coverage gaps for people who are between jobs or have recently graduated from school, among other things.

After the health law passed, some people gravitated toward them because they were willing to trade comprehensive coverage for a cheaper sticker price, even if it meant paying a tax penalty for not having the comprehensive coverage required in the law.

Sales increased.

Now, as Republicans look for ways to weaken the health law’s coverage requirements and explore the possibility of not enforcing the requirement that people have health insurance, short-term plans may be poised to grow even more. If that happens, consumer advocates warn it could be bad for consumers.

As their name suggests, short-term plans provide coverage for a limited period of time, often six months or less. They generally don’t cover such things as preexisting conditions, maternity services or prescription drugs. The policies typically have maximum coverage limits of about $1 million. Insurers can turn people down if they’re sick and may decide not to renew someone’s policy. All of these practices are prohibited in plans that qualify as individual insurance under the Affordable Care Act.

Precisely because of these limitations, however, the premiums are typically a lot cheaper than those for ACA-compliant coverage. In the fourth quarter of 2016, the average monthly premium a shopper would pay for a short-term plan sold through online insurance vendor ehealth.com was $124, compared with $393 for someone who bought a regular Obamacare plan and didn’t qualify for premium subsidies.